Dallas DA Going After MERS for UNPAID FILING FEES

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COUNTIES ACROSS NATION ARE ASSESSING LAWSUITS AGAINST MERS ET AL

In an interview with Dallas South News, Dallas County District Attorney Craig Watkins says he plans to file a lawsuit against a company representing organizations who he says owes the county millions of dollars.

A group of private attorneys is working with the county on a claim against Mortgage Electronic Registration Systems (MERS) who they say has avoided paying county fees. The suit will be filed in Dallas County District Court sometime next week.

“Counties are suffering financially,” Watkins said, “If the fees were paid, they would not have to [struggle].” The district attorney says he felt this lawsuit was necessary to protect the interests of Dallas County citizens. “It’s because of the nefarious activities of some of these entities that the county has been harmed,” he adds.

MERS is a subsidiary of MERSCORP, Inc., and was created in 1995 by many of the country’s major banks. The privately owned company is basically a computer database designed to track ownership rights and servicing of mortgage loans. Reuters describes MERS by saying, “Its main purpose was to be an electronic registry that would keep track of repeated sales of mortgage loans as the number of new mortgages and refinancings boomed.”

The MERS website explains, “Shareholders played a critical role in the development of MERS.” The site goes on to say that “through their capital support, MERS was able to fund expenses related to development and initial start-up.”

Some of MERS stakeholders includes Bank of America, Chase, GMAC, Nationwide, Stewart Title and Wells Fargo. According to this Washington’s Blog article, MERS has no employees and holds 60% of the worlds’ mortgages. The Huffington Post notes courts across the nation are looking into whether or not MERS even has the right to transfer mortgages.

Watkins says that every time a mortgage in Dallas County changed hands, lenders should have noted the transaction with the county clerk’s office, which would have required a fee to be paid. “They didn’t even cross the first step,” Watkins said.

Watkins said he recently spoke with Dallas County Clerk John Warren about MERS and the possible damages the county may have incurred. Watkins said Warren estimates more than $50 million in unfiled fees are due to the county. Attorneys have told the district attorney the amount could exceed $100 million.

The petition that will be filed in the District Court of Dallas County says MERS has “been unjustly enriched by their conduct described above by their receipt of fees charged to MERS members for MERS to track mortgage loan and mortgage transfers, which would otherwise have been recorded in the deed records of Dallas County, Texas.”

The petition will be submitted by the Dallas County district attorney’s office and Malouf & Nockels, LLC. The private firm is working for the county on a contingent basis, which means they will only be paid if there is a favorable result.

35 Responses

  1. Addresses for

    MERS
    P.O. Box 2026,
    Flint, MI 48501-2026
    tel. (888) 679-MERS.

    MERSCORP, Inc.
    1818 Library Street
    Suite 300
    Reston, VA 20190

    Mortgage Electronic Registration Systems, Inc.
    The Corporation Trust Company
    Corp. Trust Center
    1209 Orange Street
    Wilmington, DE 19801

    Mortgage Electronic Registration Systems, Inc.
    The Prentice-Hall Corporation System, Inc.
    2711 Centerville Road, Ste 400
    Wilmington, DE 19808

  2. Louise,

    I was actually looking for more information on Merscorp… but it doesn’t seem to exist! Merscorp appears to have been just a front designed to actually implement the MERS data bank. Can’t find what it’s worth, can’t find if it’s publicly traded, can’t find anything! Am I looking in the wrong places?

    Anyway, il leaves the question hanging: suing MERS is one thing. Where are they going to collect from and for what purpose? Where will those funds go, assuming that they are collected?

    The whole thing reeks…

  3. john gault—

    license or no license—how can a “debt collector” collect a “house” on unsecured debt—of which no original creditor/lender can be proven????
    Isn’t that the crux of all this “wrangling”?

  4. MERSCorp has the money not MERS.

  5. johngault

    building analogy is flawed-
    unless a blatant safety structural defect is present , the building is almost never demo’ed its merely permitted “as built ” after the fees & penalties are paid, abosolving the building dept of any and all responsibility ,
    fwiw the building dept is”never” responsible for “any defects in the building before or after erection”
    they only provide a means to monitor adherence to “building code”.

  6. @tnharry and e.tolle – In October of 2010, the Nevada Dept of B & I Financial Institutions Division issued a Cease and Desist Order against a company which is often substituted in as a trustee, for operating without a debt collector’s license. In February of 2011, QLS, the sub trustee, obtained the license. QLS instituted many foreclosure actions prior to its licensure, and now post-licensing proceed on those pre-licensure activities. In the interim (between NOD and licensure), state laws were passed mandating mediation. The banksters don’t want the mediation, of course. My argument is that QLS must start the incompleted foreclosures over now that they’re licensed, and their refusal to do so circumvents the legislation for the mediation. The Division says not. The Division’s position is QLS was required to get a license, it got one, end of story. Any thoughts? My only frame of reference which comes to mind for this is that when building is found to be done without a permit, it’s a very real possibility the building division will see to it it’s ripped down. Now of course that involves safety issues, but still……….

  7. enraged.

    “T’was before internet. Still, a lot of common sense to it. And no one says we can’t shut off power from the outside…”

    that’s a pretty good point, your last sentence above.

  8. And cubed2k

    You mentioned a few days ago not having paid your mortgage for two years without anyone claiming anything. Have you thought about quiet title? Isn’t it time to explore it? I know as soon as I get to one year, I’ll be on my attorney’s tailcoat about it!

  9. cubed2k, agree on both leverage and compound interest.

    Thought about you today….was reading about Lori Swanson at the MN AG site. She’s taking on Midland Funding big time….full court press after these sleazeball debt buyers. I think you had an issue with them? I have in the past.

    Turns out that the usual suspects….B of A, Chase, Citi, Wells and others sell Midland their written off debt for 3 cents on the dollar, then loan the money for Midland to purchase it and recoup for those same banks. Yet another incestious relation spawned from these satanic D F Brains outfits.

    One of these days the world will come to the conclusion that these banks are nothing more cesspools run by the world’s biggest losers. No redeeming value whatsoever. SCUM!

  10. At least Dallas District Attorney is interesting in suing MERS, not Greg Abbott. This is state-wide problems that Abbott needs to get involved. And he even allows 3 dollars fee a month to garnish from Child Support (kid’s milk money) from Custodial Parents from this month. And next month, they are charging 25 dollars per year annual fees in additions to the 3 dollars monthly fee.

    Child Support Disbersement Unit is run by ACS, a private entity, a part owned by Xerox. (Sorry, this is irrelevant to this site, but I could not help mentioning here.)

  11. E. Toile,

    Thank you for giving the REALLY BIG picture. That’s the one I have been looking at for… a sweet, long while. That’s called “Rebuilding America”. I like it. A real vision. Mine too.

    Tnharry: you have a few good points. And cynicism the likes of which I have rarely seen. How is your ulcer?

    You guys remember David Koresh and Waco? 1993? Leno had a great take on it: “Let’s not attack Waco and kill anyone. Let’s just build a huge wall around it and call it “Waco Penitentiary”. Care to do that around Chase, then BofA, then Congress, then… whoever you want out of the picture. You bring the concrete. I’ll lend my arms and elbow grease. When and where do we start?

    I know. T’was before internet. Still, a lot of common sense to it. And no one says we can’t shut off power from the outside…

  12. @E Tolle,

    you abolish leverage and or compound interest on the issuance of money or credit that is accounting book keeping entry and what you said goes away. Most people have to work and earn a living in exchange for money. Most people have no leverage or access to it.

    You remove the leverage and compound interest, and those that have used these vehicles will not be corrupted because it is not possible.

  13. all the board of directors of MERS is a big wig with the banks……………………………………………………………………………….

    that in itself is the problem……………..

    as Bob Brinker says………….we have the best government that money can buy………………………….

  14. well tnharry.

    the big picture – keeping people in their homes………..

    since the purpose of ones mind is to estimate efforts………

    I think it is less effort to just build a 20 foot brick wall around one’s home than to fight it out in the courts or letters back and forth between a servicer, a homeowner and a lender (but we don’t know who the lender is). And the servicer might be a pretender lender too or even a debt collector. ( Oh my god, who is who? You send me a piece of paper in the mail with no proof, I am your new servicer, but lender never sends a piece of paper saying who is the servicer.)

    Or maybe build a moat around the home, fill it with Piranha’s. Post a sign – Beware Piranhas.

    But I like a 20 foot brick wall, and then dump hot oil on those that dare to enter.

    I think my solution probably costs less too. That would be part of the effort calculation in one’s mind. Work and pay the lawyers and courts or build a moat or brick wall? Which one is easier to do?

    Hey, a man’s home is his Castle.

    Or maybe one can do this- really rat up the home, make it look rundown, spiderwebs, crackled paint, broken fences, crack in windows………..that way when the servicers do their drive by inspections,,,,,,,,,,,,,,they go “what a dump””””””””and leave it alone………………of course inside we have works of art…………….

  15. Keeping people in their homes is only one facet of this whole deal. Locking up the thousands of criminals is another. Restitution to millions fraudulently foreclosed upon is another. Reforming the broken judiciary is another. Throwing all the bums out of CONgress who have sided with these criminals is another. Seeing that the laws are changed so that the masses can’t be shredded to near extinction is another. Returning the millions upon millions to county recorders is yet another. Having a closed circuit TV inside the cell of A. Mozilo with microphone inputs accessible to anyone who wants to sing really bad Disney songs to this jerk at very high volumes day and night is the biggest goal of mine.

  16. Good point, tnharry, but if it takes a thousand cuts to bring MERS down, then these lawsuits can only help in the big picture.

  17. The big picture I refer to is keeping people in their homes. I thought that was the point of this site. How would you say collecting filing fees for county govt promotes that?

  18. and our friend eric schoop how’s yah doing is also at Fannie Mae:

    http://www “dot” treasuryandrisk.com/2005/10/01/40-under-40

  19. @enraged:

    mers board of directors Eric Schuppenhauer. did a google search and found this

    http://www dot sec.gov/news/press/2004-63.htm

    oh my god. There you go, all these guys are in bed with each other.

  20. I’d kill to know what “the big picture” is, tnharry. Care to share?

  21. http://www.mersinc.org/about/bod.aspx

    Never mind. I found the info…

  22. MERSCORP board of directors:

    Kurt Pfotenhauer, Chairman Executive Vice President and Vice Chairman First American Title Insurance Company Santa Ana, CA
    Bill Beckmann President and CEO MERSCORP, Inc. Reston, VA
    Albert Celini Vice President, Single Family Operations and Technology Freddie Mac McLean, VA
    Diane Citron Senior Vice President, Director of Strategy for Mortgage Operations Ally Financial, Inc. New York, NY and Fort Washington, PA
    Joe Jackson Senior Vice President Wells Fargo Bank, N.A. Des Moines, IA
    Brian McCrackin Director of Finance CitiMortgage, Inc. St. Louis, MO
    Gwen Muse-Evans Vice President and Chief Risk Officer for Credit Portfolio Management Fannie Mae Washington, DC
    Robert Reynolds Executive Vice President SunTrust Banks, Inc. Richmond, VA
    Eric Schuppenhauer Senior Vice President, Home Lending JPMorgan Chase Columbus, OH
    David H. Stevens President and CEO Mortgage Bankers Association Washington, DC
    Lawrence P. Washington Managing Director and Servicing Portfolio Strategy Executive Bank of America, N.A. Jacksonville, FL

  23. why would a few states trying to collect filing fees qualify as “anything being done”? not trying to stir the pot with that, but these cases and stories reporting them are nothing but amusing anecdotes. they have nothing to do with the big picture.

  24. It is a collection matter but… assuming 3100 counties get judgments in their favor, where do they collect from? Or is this all the biggest exercise in futility to sidetrack everyone and lure us into believe that something is being done?

  25. Well…

    Anyone knows who is on MERS Board? It is an “Inc.”. So, there has to be a board…

    Jamie Dimon on that board, by any chance?

    Somebody, make my day!

  26. now e tolle, you and Adam Levitin are being very unfair – they had that law firm write a memo that it was a valid business model. of course, the law firm didn’t actually research anything, but MERS did its due diligence…

    MERS was never foreclosing, it was always the creditor hiding behind them.

    piercing the corporate is easier said than done. and there really isn’t a great case for true fraud in the filing fee cases – it’s more of a collection matter.

  27. I’m sure they have corporate liablity insurance, which would be exhausted after just one major loss I’m guessing. They could also be sued individually, if mismanagement was proven, which doesn’t seem like it would be hard at all to prove. As Adam Levitin said, and I’m paraphrasing here, “I’m not the one who decided to build an entire corporate structure and business model based upon unproven, untested law.” Screw MERS.

  28. Tks tnharry,

    In that case, quite a few questions come to mind…

    When MERS was foreclosing on homeowners, who paid for their attorneys and legal expenses? And if MERS is being sued by counties all across America, does that mean that every single entity having contributed to its creation is jointly and severally liable for those fees? How would the Defendant(s) be listed? Fannie Mae + Freddie Mac + Chase + BofA + mortgage originator + lender…?

    It seems to me that it opens more questions than it answers…

  29. that’s a fair question and one i asked before. they could try to pierce the corporate veil i suppose, but MERS alone almost certainly doesn’t have that kind of money

  30. Question, though…

    MERS has no employees, no offices, no… nothing! Does MERS actually have any money to go after? Because if it doesn’t, I can’t see what good will come out of it.

  31. @e tolle – now that one is completely valid and something very few people have caught onto. i’ve seen firsthand that the winning bid is “assigned” to Fannie or Freddie prior to execution of the deed so they are exempt from transfer tax. these MERS/filing fee cases are questionable and local law dependent. the post-sale transfer tax is much closer to a slam dunk.

  32. @ tnharry, it may not technically be a MERS deal, but what is starting to be sued on is banks transferring to GSE’s just prior to foreclosure, in an attempt at bypassing real estate transfer taxes, not recording fees. But we all know that Fannie and Freddie aren’t government entities legally, just under conservatorship, not receivership. Therefore they have no business attempting to escape these fees. Bad guys lose.

  33. I think we’ve covered this before, but does TX actually require that assignments be recorded in the register’s office? if not, then MERS hasn’t avoided paying anything through its nefarious scheme. not all states actually require assignments be recorded in the register’s office.

    in fact, that may be the single biggest item of impact in the industry. if all states required recording for EACH assignment, then MERS would effectively be legislated out of business and there wouldn’t be nearly as many secrets.

  34. Don’t mess with Texas!

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